Stuck: Young America's Persistent Jobs Crisis

Stuck: Young America's Persistent Jobs Crisis

Young adults are in a critical period of change and choices, as they confront the decisions that will pave the way to their futures. But the generation coming into its own in the aftermath of the Great Recession faces challenges that threaten to undermine even the best laid plans.

Demos investigated the Bureau of Labor Statistics data for young adults in 2012 in order to see how the experience of young people today affects their prospects for tomorrow. We found that last year passed with no significant gains for young people, who continue to endure a jobs crisis even as the economy recovers. The latest numbers from 2013 reveal no significant change in the trend. Without policy targeted to the needs of young adults, we risk a generation marked by the insecurities of the Great Recession for the rest of their working lives.

Key Findings

Young people are facing a jobs deficit of over 4 million jobs.

The economy needs to add 4.1 million new jobs for young adults in order to return to employment at the same levels as before the recession began. If we continue to add jobs at the current rate it will be 2022 before the country recovers to full employment. Even then, workers under 25 will face unemployment rates double the national average.

Young adults gained little ground in 2012.

Altogether, there are more than 5.6 million 18 to 34-year-olds who are willing and able to take a job and actively looking for work, but shut out of opportunities for employment. These young adults compose 45 percent of all unemployed Americans. An additional 4.7 million young people were underemployed—either working part time when they really wanted full-time positions or marginalized from the labor market altogether. Last year, the unemployment and underemployment rates for people under 25 were more than double those for workers over 35.

Young African American and Hispanic workers face higher unemployment and underemployment than white workers in their age groups.

Young adult Hispanic workers experience unemployment rates 25 percent higher than those of whites, while African Americans face rates approximately double. One in four African Americans between ages 18 and 24 is looking for a job but cannot find one, as are more than one in seven Hispanic young adults.

The greatest employment differences in any age group appear by education, showing those with no college degree are at a significant disadvantage in the job market.

The unemployment rate for workers with a high school diploma is twice as high as unemployment among workers with a Bachelor’s degree. In the 18 to 24-year-old age group, 19.7 percent of high school graduates with no college experience were unemployed and 1 in 3 was underemployed. Among 25 to 34-year-olds 11.2 percent of those with only a high school degree were unemployed and 1 in 5 were underemployed.

There was not enough job growth in 2012 to pull young people back into the workforce.

In 2012, the labor force participation rate of 18 to 24-year-olds declined to its lowest point in more than four decades. At the same time, 25 to 34-year-olds stopped leaving the job market for the first time since the recession began, but the gains were small. Workers with a four-year degree are 9 to 12 percentage points more likely to be in the labor market than workers with a high school diploma in every age group.

Declining labor force participation rates have stripped the productive capacity of the U.S. workforce.

If young people participated in the labor force today at the same rates they did in 2007, there would be 2.18 million additional 18 to 34-year-olds in the workforce.

Policy has the potential to redress the failures of markets and protect our collective future.

Public investment to directly employ young adults—especially young adults of color and those without a college degree—could address the jobs crisis facing this generation, contribute to the recovery through increased consumer spending, and accomplish the kind of strong, stable, and diverse society that we envision for our future. 

Executive Summary

Early adulthood is a time of change and choices. Young people progress out of high school or college and into the work force, out of their parents’ homes and into their own households, and they face decisions about relationships, careers, ideals, and values as they embrace the goals and responsibilities that will pave the way to their futures. But for Millennials reaching this critical period of transition, time is standing still. For many young people the promises of finding a good job, starting a family, or making a better life for themselves are all on hold as they struggle to locate any opportunity in an economy that is reluctant to provide the chances necessary for forward motion. Instead, this generation of young adults spent 2012 striving for better positioning in a labor market that pushed them toward the sidelines, resulting in historically low labor force participation rates and more economic drag. 

For this generation, obstacles appeared on the pathway to a stable and secure working life long before the Great Recession. People with a college degree are still the minority of young workers, but over the past 30 years they were the only group to see real earnings gains.1 Among those with no college experience incomes actually declined—as much as 25 percent in the case of men who entered the workforce with only a high school diploma. At the same time, the cost of living continued to grow and the expenses of raising a family, buying a home, attaining health care, or achieving a postsecondary education put those pursuits increasingly out of reach. Unlike previous generations, when young Americans could expect to do better than their parents, young adults today struggle to find jobs that offer the prospect of even maintaining the standard of living with which they grew up. 

The persistence of racial and ethnic disparities puts this generation even farther behind as the population becomes increasingly diverse and increasingly unequal at the same time. Young people of all races and ethnicities are having a hard time establishing a career path, but African American and Hispanic workers fare worst, with higher unemployment rates even in the best of times and an earnings gap that has yet to be successfully eliminated through policy or practice. The opportunity for an equal shot at economic success is one of America’s great strengths, offering young people the incentive to strive and a reason to believe in the future of the country. The systematic exclusion of young people of color from that opportunity weakens the promise of America now and in the future, jeopardizing our social cohesion, civic participation, and economic progress. 

Then, after 30 years of policy that failed to address the trends of widening inequality, income stagnation and declining living standards, the 2007-2008 financial crisis and its aftermath set the generation back even further: wiping out net worth, stalling labor markets, and displacing millions of young people eager for jobs. Today’s high rates of unemployment not only refuse millions of young adults the chance to get ahead by working hard, they also hold down wages for those lucky enough to find employment. Pervasive joblessness increases the risk of changing jobs or negotiating for better pay; that in turn reduces the capacity for workers to identify the position where they can be most productive, stifling their careers as well as economic growth. Instead of gambling on a risky labor market, people in their 20s and 30s are working the same part-time jobs they have held to make do until better opportunities arise, often working in fields they do not like and letting what skills they have amassed go to waste. 

The greatest pressures mount at the bottom, as workers with college degrees take positions in low-wage industries out of necessity, increasing the competition for bad jobs and shunting those with less formal education into positions with even lower wages and mobility. More jobs that used to provide a stable income for anyone willing to work now require a college degree just to score an interview. Today’s young people attend college in record numbers because they recognize that the best way to attain income security is through education. But increasingly, graduates emerge from college burdened with student debt and unable to find positions that offer high wages, benefits, or the entry point to an enduring career. As those graduates take whatever opportunities they can find to pay the bills, the options for less-educated workers narrow even further. 

This generation of young adults will bear the scar of the Great Recession well into their working lives. If we continue to add jobs at the 2012 average rate, it will take until 2022 before the country recovers to full employment and restores the opportunities that our young people need. Meanwhile, those attempting to establish financial independence are held back by bad timing and inadequate policy response. They will start their careers later, earn less, and put off the kinds of investments that establish security for the future. Last year passed with no efforts to address this trajectory and young people muddled through. The latest numbers from 2013 reveal no significant change in the trend. Looking at the labor market experience of people under 35 shows a generation running in place; despite the efforts and attitudes of young adults, life is moving forward but their position stays the same. 

 

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